IMF: Brunei's GDP to contract by 2% in 2016

Koo Jin Shen
BANDAR SERI BEGAWAN
Friday, May 6, 2016

THE International Monetary Fund expects Brunei’s economy to contract by two per cent this year, lower than its October 2015 forecast of 3.2 per cent expansion for 2016.

According to IMF’s latest Regional Economic Outlook for Asia and Pacific report, Brunei’s GDP forecast for the year continues a downward trend that started in 2013.

But the IMF expects the sultanate’s economy to rebound in 2017, with GDP seen to expand by three per cent. This figure is lower than the 3.8 per cent growth projected in October 2015.

The IMF said Brunei’s economy shrunk only by 0.2 per cent in 2015, in comparison to a forecasted contraction of 1.2 per cent that was made last year.

The Washington-based institution said ASEAN’s economic growth will remain uneven, reflecting the member countries disparate stages of development.

For most major ASEAN economies, the turning of the credit and housing cycles and the increase in benchmark lending rates and spreads are expected to have an impact on domestic demand. Recent declines in the equity markets have likewise dented sentiment.

Headwinds from the weak global recovery, a broader tightening of financial conditions and high debt are also expected to slow down growth.

In Indonesia, GDP is projected at 4.9 per cent in 2016 and at 5.3 per cent in 2017. Exports are expected to remain weak on back of low commodity prices. Domestic demand is projected to remain resilient thanks to strong public investment.

Lower fuel prices will support private consumption, but the IMF said gains in this area will be partly offset by lower disposable income growth in rural areas and cuts in electricity subsidies.

In Thailand, the economy is expected to recover slightly to three per cent this year and to 3.2 per cent in 2017, driven by public spending, a pickup in private consumption, and the continued growth of tourism.

Strong domestic demand will continue to boost the Philippine economy, with GDP projected to increase to six per cent this year and to 6.2 per cent in 2017.

Malaysian economy is projected to slow to 4.4 per cent in 2016 before recovering to 4.8 per cent in 2017. Domestic demand is expected to remain resilient, and while credit growth is projected to slow, monetary conditions should remain supportive.

Consumption growth will also be supported by a temporary cut in pension contributions, tax relief for lower-income taxpayers, and expanded federal transfers to lower-income groups. Investment growth will slow down owing to lower exports, declining commodity prices and political uncertainty.

Singapore’s growth has slowed sharply and is projected to ease further to 1.8 per cent this year before recovering to 2.3 percent in 2017, reflecting structural and cyclical factors. Growth is constrained by an aging labour force, tighter limits on inflows of foreign workers, and the transition costs of ongoing economic restructuring.

In Vietnam, exports and FDI are expected to perform well as cost-sensitive producers continue to be attracted by the country’s large labour force and generally low wages. GDP growth is seen to ease by 6.3 per cent in 2016 and by 6.2 per cent in 2017.

The Brunei Times